Howe Street Land Sale

All about

City of Vancouver’s June 10, 2014

“Resolution” of

“Closure and Sale of a Portion of Lane Adjacent to 1412-1480 Howe Street”

 

Aka:

How a City can keep sale details quiet if they lose loads of money disposing prime development land?

or:

How a City can build luxury housing on government owned land without telling anyone?

or:

How to really confuse people during a public hearing and/or land disposal?

or:

All of the above.

 


The City is encouraged to update their current “1412-1480 Howe Street” rezoning web page with any facts, updates or clarifications. Neither the sale price nor valuation details regarding these land transfers have ever been made public by the City of Vancouver. All values in this study were found through BC Assessment and BC Land Titles Registry. Only limited information concerning the sale could be obtained from the City itself after years of searching.

Nowhere on the City rezoning application website does it contain information or links to the actual land disposal contracts or valuations. The City website as it looked on March 13, 2018. LINK: CoV_Website_Rezoning Application, 1412-1460 Howe


The Sale Process

A City of Vancouver October 29, 2013 rezoning approval indicated that further authority would be required by City Council to dispose a portion of City lanes if sold. No information was provided regarding the sale price or values of those City owned lanes. Eight months later on June 10, 2014, City Council approved a staff “Motion” without any public involvement, nor disclosure of price. The title of the motion suggested that it was purely a sale of lanes, as indicated by the resolution for “Closure and Sale of a Portion of Lane Adjacent to 1412-1480 Howe Street”.

Seventeen days later on June 27, 2014, the City sold 12 land parcels consisting of 118,000 square feet or 2.7 acres. This was far more than just a sale of lanes “no longer required for municipal purposes”. Staff only allowed one investor the opportunity to purchase these land parcels and refused to hold competitive bidding. This was all part of a private sale process for prime downtown land that was rezoned to build condos for a private investor. The recently approved pre-sale units were immediately marketed offshore through offices in Singapore, Hong Kong and China by the Mayor’s 2014 election fundraising Chairman Bob Rennie who obtained the listing contract through his privately owned firm.

On June 27, 2014 the City of Vancouver received $32,444,621 when it transferred 118,000 sq.ft from 12 individual land parcels to Howe Street Ventures which owned 17,896 sq.ft. on 4 parcels itself. The City owned land made up roughly 87% of the combined holdings. These parcels were then converted into the three new land titles whose assessed values are shown below. The conservative valuation completed by BC Assessment 4 days after the titles were transferred to Howe Street Ventures indicated that the value of the entire development site was $100 million above the sale price, totaling $129,891,800. Financing details suggest the value was even higher than $129 million on the day of transfer. LINK:Value-$129Million

(above) Mayor Robertson with his 2011 election fundraising Chairman Mr.Gillespie

The Mayor’s 2011 Vancouver election fundraising Chairman is the CEO of Westbank Projects and Howe Street Ventures. On the day the City transferred 118,000 sq.ft. of land to his company, $100 million dollars in mortgages were registered against this newly rezoned bare land development site. The $100 million provided the purchaser $67,555,379 more than was required to cover the $32,444,621 payment to the City. Top City staff involved in the sale should have known that lenders were providing the purchaser 3x the $32 million sale price. They also should have known this was only possible because they were selling the land at a fraction of the current market value. City staff are experts in finance and law and should have known the property had to be worth at least 1.5x the $100 million in loans for bare land. At the same time, staff are technically forbidden to sell property below market value, unless to a charity.

The report shown at the public hearing on October 24, 2013 & 29, 2013 indicated that no competitive bidding process was required if a bidder owned the majority of a development site.

The City incorrectly suggested the applicant had been the majority owner of the development site for over a year when the City was actually still the registered majority owner for another 8 months. It was not until June 10, 2014 that Council quietly approved a resolution to dispose “a portion of lane” which led to the transfer all 118,000 sq.ft. of land on June 27, 2014.

LINK: No Bidding_Page7_Oct24,2013

The 2013 rezoning report contemplated a sale of City owned lanes “subject to rezoning” and a further approval. It was the primary source document in the October 29, 2013 subject rezoning approval.

LINK: H_Report_Oct24_2013_Cover

For over two years staff repeatedly indicated that only the Mayor’s 2011 fundraising manager was the “Owner” of the development site when BC Land Title records indicated the City was still the registered owner of all of the City 2.7 acres until July 27, 2014. Two years prior to the transfer of the roughly 2.7 acres of land, City staff produced “Information Sheets” (LINK: Info_April2012 ) that indicated the applicant was already the only land owner. If that was true in April 2012 then why did the BC Land Titles registry indicate that the City was the registered owner for over two more years?

Real Estate Services Staff told Council and the public they had reviewed the applicant’s development proforma for this rezoning application and concluded that the negotiated Community Amenity Contribution was appropriate and a sale of city-owned land was subject to the lands being rezoned.

The following paragraph on page four of the October 2013 report made little sense?

City staff indicated that Engineering Services would have to bring a further report to Council to obtain authority to sell the “portions of lane” to the “registered owner of those lands”. With the City being the actual “registered owner” of those lands, or at least the vast majority of those lands, the wording of this document was obviously wrong. Staff were essentially saying that Council authority was needed to give land back to itself…unless “portion of lanes” held another meaning? Link: Further_Authority_required

At the time of the October 2013 public hearing, the applicant had not yet purchased any of the land from the City according to BC Land Titles Registry, the development had not yet been approved, and the resolution to dispose the land had not yet been brought to Council. It was not until eight months later that City Council approved an oddly worded resolution and immediately sold their land holdings.

LINK: CA3809795_Sale

LINK: Page8_Oct_2013 Although never clearly disclosed through either the public engagement process or public hearing, staff negotiated the sales terms for the vast majority of the development site or 118,000 square feet of land prior to August 15, 2012. The badly labelled image below was included in the public hearing staff report to describe the land to be sold and provided one month in advance of the hearing. The diagram was incorrect in more than one way. The largest area of land to be disposed was missing from the diagram legend, and the City owned land was inconsistently labelled. A corrected diagram was made available 24 hours before the public hearing for those who searched for it.

PINK & BLUE DIAGRAM – DESCRIPTION OF LAND OWNERSHIP

An accurate diagram was provided to City staff by the applicant who did a great job explaining things. City staff provided no such clarity to the public in their own diagrams.

LINK: Land Ownership

A March 14, 2014 report was eventually discovered that is not on the City development application website nor was it disclosed to the public at the time of the pubic hearing. It provided information that had not been shared at the October 2013 public hearing, including that on September 25, 2012, the Director of real estate services executed a purchase and sale agreement.

This report impossibly suggests that City Council approved the sale of these City lands 1.5 years before they were rezoned in a public hearing, and over two years before Council approved the motion to sell any land which was still to happen on June 10, 2014. Staff suggested the sale was made years before any money changed hands, and years before the actual land transfer. A serious credibility issue is that the City did not collect any money for over two years and the 2014 motion to sell the lands, did not mention selling 2.7 acres. It looked like a motion to sell surplus lanes.

This reported stated that, “The value of the City Lane has been incorporated in the overall value of the land sale approved by Council on May 1, 2012”. The preceding comment appears difficult to believe since the motion to dispose the property was not made until over two years later and suggested it was only a sale of surplus lanes.

The BC Land Titles Registry history indicates that only one payment was ever made on July 27, 2014 for all of the land, and reverses the City notion that the buyer already owned most of the land in 2012. It also seems to contradict the City’s weak argument for not allowing competitive bidding from others.

  • “On May 1, 2012, Vancouver City Council (Administrative Report – RTS 9463) approved the sale of City owned lands at 1412-1450 Howe Street, 1410 and 1429 Granville Street and the City Lane to Westbank.”
  • “The GMES, in consultation with the Director of Real Estate Services, recommends approval of the Recommendations contained in this report.”

It appeared as if only the lane was being sold.

The $32,444,621 amount collected on June 27, 2014 was determined two years earlier as you can see at the bottom left corner of this document. LINK:2012_$32Million_Page6

The City Contributed About 87% of The Land

The private property refers to the 17,896 square feet owned by the investor out of the 135,376 sq.ft. total. The private property represented about 13% of the site while the City 118,000 sq.ft. contributed about 87% to the new site. The following link describes the combined size and miraculously lists the City as a part owner of the lands over a year after listing the investor as the only owner. LINK: PARCELDOC_2013Oct24_Staff_Report_Page90

 

LINK: 2014June10_SALE_Motion In early June 2014, Staff presented an Administrative Motion “resolution” to Council to dispose of the lanes but all 2.7 acres were sold after this motion was passed.

LINK: CA3809795_Sale 17 days later on June 27, 2014, staff transferred far more than just lanes to the purchaser / applicant. The lanes were consolidated into 12 legal land parcels that were also owned by the City and the 12 parcels were sold and transferred for $32,444,621.

Neither this sale price, nor the actual market value of the land parcels at the date of transfer were ever disclosed to the public. The two mortgages secured by 100% of the newly consolidated development site and registered on the date of the land sale transfer for approximately 87% of the site, amounted to $100 million dollars. $32,444,621 was paid for the approximate 87% of the site that was purchased from the City.

HSBC $50 Million Loan: LOAN_HSBC_CA3809858

FULCRUM $50 Million Loan: LOAN_FULCRUM_CA3809860

 

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